Downtown Aspen’s commercial carousel takes a pause
Forecasting the future of Aspen-area commercial real estate has earned Randy Gold regular speaking engagements at the Aspen Board of Realtors’ annual luncheon, and his company has done more than 24,000 property appraisals over the past four-plus decades.
These days, however, Gold is shunning the crystal ball when it comes to commercial real estate downtown, whether it concerns property values or demand for commercial leases.
“It’s too soon to tell,” he said last week. “Most of the landlords have tried to do some kind of accommodating; whether willingly or begrudgingly, most of them are doing that. But I don’t think anyone I know is making any long-term commitments.”
A rent-relief program, introduced by the city in response to the pandemic, is aiding more than 100 Aspen businesses from April through July. The program requires financial participation from tenants, landlords and the city, with each paying one-third of the monthly rent. Tenants are receiving an average subsidy amount of $8,320.
Public health orders, put in place to prevent the spread of the novel coronavirus, restrict retailers and restaurants from maximizing their business potential because of capacity limitations, yet the city is opening up certain public right of ways, like parking spaces downtown, to outdoor dining.
Restaurants are allowed to be open at 50% capacity with their tables at least 8 feet apart. Gone this summer also are those marquee events that help butter the bread of Aspen’s retail economy — from the Food & Wine Classic to the Aspen Music Festival and School.
At the same time, Aspen’s retail scene this summer isn’t seeing an exodus of shops and restaurants. It’s also not seeing an onslaught of openings, yet a few businesses are debuting downtown, such as the Pie Shop Aspen restaurant in the Mill Street pedestrian mall.
“I think a lot of people think there are going to be a massive retail vacancies downtown, and we’re not seeing that,” said commercial property broker Karen Setterfield, whose clients include downtown landlords Tony Mazza and Frank Woods.
Last week Setterfield was the broker on leases signed for Yvel fine jewelry at 525 E. Cooper Ave. and Gallerie Y at 430 E. Hyman Ave. Both spots previously had been occupied by skin-care boutiques whose employees handed out free lotion samples to passersby and were the subject of numerous court complaints about their sales tactics. Gallerie Y will have the work of Aspen photographer Larry Weidel, Setterfield said. Guadalupe Laiz also extended her gallery lease in the Mill Street mall, so things are looking up in some aspects, Setterfield said.
The outdoor malls were active over the weekend, and not just during the Black Lives Matter demonstrations. But the recent evidence of human activity in the malls won’t mean much when the tenants’ leases come up for renewal, said longtime Aspen commercial broker Bob Langley, now with Slifer Smith & Frampton Real Estate LLC.
“Nobody knows what’s going on,” he said. “Nobody does, and because of that the leases that have to be extended now are not extended now. People are waiting. There are people willing to do a pop-up situation, maybe, but everybody is nervous.”
Reluctance among current retailers and potential tenants to commit to long-term leases has the market more or less at a standstill, Langley and Gold said. Things should crystallize after Labor Day if not the November elections, given both the magnitude and multitude of such factors as the economy, jobs, PPP funding, social unrest, politics, the global pandemic and the event of a surge later this year in COVID-19 cases.
Bryan Semel, one of the brokers on the lease that will bring Eden Fine Art to Aspen this summer, possibly as early as July, said deals are going to look different in the future. Future demand for long-term leases is in question, Semel said, noting that the city’s permit fees and other charges “don’t make it the most inviting business atmosphere.”
Eden, which has galleries in New York City, will take up all 7,200 square of the new building at 534 E. Cooper Ave., where Boogie’s Diner used to be.
On the sales side of the commercial market, buildings suited for restaurants might give potential buyers pause in the current economic climate, Gold said. Buildings more suited toward retailers with durable income will have more allure, he said.
“Everyone is different, but if I’m an investor, I’m thinking about the long term and the seller might say, ‘Yeah, we’ve got all of this history with good tenants and high rents.’ But how durable is that moving forward if this (social distancing norms, the looming possibility of public health restrictions) is the new model?”
Both Gold and Setterfield said they were unaware of any commercial buildings in Aspen that have been put on the market since the global pandemic broke out in March.
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